1942 (12) TMI 14 - Other - Indian Laws

Summary

Issues Involved:
1. Validity of the mortgage under para. 11 of Schedule 3, Civil Procedure Code (CPC).
2. Bar of limitation on the personal covenant.
3. Right to relief under Section 65, Contract Act.

Detailed Analysis:

1. Validity of the Mortgage under Para. 11 of Schedule 3, CPC:
The primary issue was whether para. 11 of Schedule 3 applied to render Iltifat Ahmad Khan incompetent to mortgage Mahona Poorab on 12th August 1919. The mortgage was executed after a series of legal proceedings involving the mortgaged property. The defendants argued that the mortgage was void as it was made without the written permission of the Collector, as required under para. 11 of Schedule 3, CPC.

The court found that on 12th August 1919, the Collector could still exercise powers over Mahona Poorab, as the sale of the property had not been confirmed and the time for setting aside the sale had not expired. Therefore, the mortgage was executed in violation of para. 11, making Iltifat incompetent to mortgage the property.

2. Bar of Limitation on the Personal Covenant:
The plaintiffs sought relief by enforcing the personal covenant for repayment. However, the trial court and the Chief Court both held that the claim on the personal covenant was barred by limitation. The plaintiffs' argument for relief under Section 65 of the Contract Act was not entertained by the Chief Court as it was not pleaded initially.

3. Right to Relief under Section 65, Contract Act:
Section 65 of the Contract Act states that when an agreement is discovered to be void, any person who has received any advantage under such agreement is bound to restore it or make compensation for it. The plaintiffs argued that they should be granted relief under this section as the mortgage was discovered to be void.

The court considered whether the plaintiffs could claim restitution under Section 65. It was held that the incapacity imposed by para. 11 affected the judgment-debtor's right to deal with his immovable property but did not take away his personal liability to repay the loan. The plaintiffs could not claim both under the personal covenant and Section 65 simultaneously. The court concluded that the plaintiffs were entitled to relief under Section 65 as the mortgage was discovered to be void after the suit was instituted.

Conclusion:
The appeal was allowed. The decrees of the trial court and the Chief Court were set aside. The plaintiffs were granted a decree for payment out of the property of Iltifat Ahmad Khan deceased of Rs. 10,000 with simple interest at 6% per annum from 12th August 1919 until the date of the Order in Council. The defendants were entitled to set off all payments made in respect of the advance. The Chief Court was directed to take any necessary accounts to ascertain the sum payable, which would carry interest from the date of the Order in Council at 6% per annum until payment. The respondents were ordered to pay the appellants' costs of the appeal, but each party would bear its own costs in the courts in India.